30th Aug, 2022
Abstract: Fino Paytech is an institutional investor-driven company owned by international and Indian investors. Fino Paytech having its headquarters at Mumbai with offices across India was established in 2006. The company has emerged as a thought leader, innovator and implementer of technology solutions for institutions like banks, micro-finance institutions, government entities and insurance companies. Fino Paytech is a thought leader, innovator and implementer of technology solutions for institutions like banks, governments and insurance companies.
Founded in 2007, Fino PayTech got the RBI’s approval to set up a payments bank in September 2015. The payments bank’s operations started in June 2017 and competes with Paytm Payments Bank, Airtel Payments Bank, Jio Payments Bank, among others. Fino Paytech is a business and banking technology platform combined with an extensive services delivery channel whose vision is to fulfil every financial service needs of its customers, and thus become their universally preferred choice. As an alternate banking channel, it is engaged in enabling end-to-end customer sourcing and servicing.
Fino Paytech is an institutional investor-driven company owned by international and Indian investors. The company has emerged as a thought leader, innovator, and implementer of technology solutions for institutions like banks, micro-finance institutions, government entities, and insurance companies. As an alternate banking channel, Fino Paytech enables seamless end-to-end customer sourcing and servicing. Fino Paytech Limited Group is primarily engaged in providing technology-based solutions and services related to financial inclusion. It is a business and banking technology platform combined with an extensive services delivery channel. The Group includes a Non-Banking Financial Company – Non-Deposit Accepting or Holding Company (‘NBFC-ND’) registered with Reserve Bank of India (‘RBI’). It is engaged in providing finance to poor women in rural areas of India who are organized as Joint Liability Groups (‘JLG’). Group services institutions like banks, microfinance institutions, government entities, and insurance companies.
Fino Paytech business model derives its strength from the robust in-house technology, versatility of operations, scale of the channel and customer know-how. The challenges of serviceability and scalability of the traditional banking channels have been addressed by way of innovation. Fino Paytech have been serving the under-banked micro customer segment for over a decade and consider this as an acknowledgement of the work that they have done.
Overview: The success of the business correspondent service domain is rooted in effective field management, because the majority of the risks here arise due to remoteness of customers. Fino Paytech has leveraged its extensive field experience to develop appropriate cutting-edge solutions, to manage the varied field aspects of operations more productively.
Customer Enrolment Solutions: Fino Paytech has developed various applications that can be used to effectively acquire micro customers. This can be achieved by using simple processes and minimal hardware (including mobiles) to address the infrastructural challenges on the ground. Fino Paytech services also assist Indian entities to leverage this technology towards rapid acquisition of micro customers.
Hardware Solutions: Fino Paytech Financial Inclusion Solution is driven by the robust and yet affordable technology and limited products. Fino Paytech provides a full suite of biometric products for enrolment, storage and verification, while also maintaining all back end system elements – thus enabling them to develop and offer exclusive financial inclusion applications.
Operations Solutions: The operations solutions team of Fino Paytech manages data messaging to churn out the required information for day-to-day planning and management of operations. The principals may either utilise some of the pre-designed reports by Fino Paytech, or ask for customised reports.
It can be again said that Fino Paytech is one of the unique and better thought leaders, innovator and implementer of technology solutions for institutions like banks, governments and insurance companies. It helps in providing a business platform and banking technology that is combined with extensive services delivery channels. As a fluctuating banking channel, it also enables end-to-end customer sourcing and servicing.
Unlisted shares of Fino Paytech
- Fino PayTech’s unlisted shares were trading at INR 300- INR 325 levels just two months back and at INR 100-120 levels at the beginning of the year
- While Fino PayTech shares are usually available in the market, the sudden surge in demand after the IPO announcement has led to a shortage
- Fino Payments Bank’s parent company is owned by a host of stellar names like Blackstone, BPCL, LIC, ICICI Group, among others.
Unlisted shares of Fino PayTech, the 100% owner of IPO-bound Fino Payments Bank, have shot up to a price of INR 375 apiece in the grey market of the share world. This happened after Fino Payments Bank filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI to raise INR 1,300 Cr via an initial public offering.
On further investigation, it was found that Fino PayTech’s unlisted shares were trading at INR 200- INR 225 levels just two months back and at INR 100-120 levels at the beginning of the year. While Fino PayTech shares are usually available in the market, the sudden surge in demand after the IPO announcement has led to its shortage.
In FY21, Fino processed and facilitated more than 434 Mn transactions having a gross transaction value of INR 1.32 Lakh Cr. The bank said it has the largest network of micro ATMs as of March 2021, with a market share of 55% along with a network of 6.4 Lakh merchants and 25.7 Lakh accounts. Payments banks have been around in the Indian market for years, but only in recent times have they become more relevant stakeholders in the fintech ecosystem.
In April 2022, the Reserve Bank of India announced that payments banks will be allowed to enhance the limit of maximum balance at the end of the day from INR 1 lakh to INR 2 lakh per individual customer. The decision was taken based on a review of performance of such banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants.
Future Prospects of Fino Paytech
Fino Payments Bank provides services to unpenetrated rural India via a network of 0.81 million merchants. It is a capital light business that largely relies on fees for revenue and has significant operating leverage. However, analysts say that the key risk to the business is increasing competition that may result in higher merchant pay-outs, which could dent margins. As per norms, since a payments bank cannot undertake lending activities, it is not mandatory for it to have a diversified ownership structure. Therefore, no maximum shareholding limit for promoters is prescribed. However, the promoters should hold at least 40 percent of paid-up equity capital for the first five years from the commencement of business.
The unlisted shares of Fino Paytech soared about 20 % to Rs 380-400 in the unlisted market within hours of the SEBI nod. The script was trading at Rs 330-340 ahead of the announcement, up substantially from Rs 200 at the start of the year. Last month, the company had floated its right issue at Rs 252 apiece. Dealers of unlisted markets are advising investors to understand that the IPO-bound lender and the active counter in the unlisted market are two separate entities.
“Fino Paytech is the holding company of Fino Payments Bank, whose IPO has been approved. The big names have invested in Fino Paytech, not the bank.”
The fintech bank turned profitable in the fourth quarter of FY20 and has consistently enhanced its profitability since. The company will utilise the IPO proceeds from fresh issue to augment its Tier 1 capital base to meet future capital requirements.
Tell us in the comments section below whether you would like to invest in Fino Paytech Ltd unlisted shares.
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